NYSE:FLS

Stock Analysis Report

Executive Summary

Flowserve Corporation designs, develops, manufactures, distributes, and services industrial flow management equipment in the United States, Europe, the Middle East, Africa, Asia, and internationally.

Rewards

Trading at 9.4% below its fair value

Earnings are forecast to grow 17.46% per year

Earnings grew by 112% over the past year

Pays a high and reliable dividend of 1.65%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Established dividend payer with proven track record.


Similar Companies

Share Price & News

How has Flowserve's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FLS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.7%

FLS

-1.6%

US Machinery

0.06%

US Market


1 Year Return

-3.7%

FLS

10.0%

US Machinery

19.4%

US Market

Return vs Industry: FLS underperformed the US Machinery industry which returned 10% over the past year.

Return vs Market: FLS underperformed the US Market which returned 19.4% over the past year.


Shareholder returns

FLSIndustryMarket
7 Day-4.7%-1.6%0.06%
30 Day-8.9%-2.6%1.1%
90 Day-5.1%2.2%8.9%
1 Year-2.2%-3.7%12.0%10.0%21.9%19.4%
3 Year-0.6%-5.5%36.7%28.1%48.9%39.3%
5 Year-20.6%-26.9%61.6%42.6%71.9%53.1%

Price Volatility Vs. Market

How volatile is Flowserve's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Flowserve undervalued compared to its fair value and its price relative to the market?

9.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FLS ($45.98) is trading below our estimate of fair value ($50.75)

Significantly Below Fair Value: FLS is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: FLS is poor value based on its PE Ratio (23.7x) compared to the Machinery industry average (21.4x).

PE vs Market: FLS is poor value based on its PE Ratio (23.7x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: FLS is poor value based on its PEG Ratio (1.4x)


Price to Book Ratio

PB vs Industry: FLS is overvalued based on its PB Ratio (3.4x) compared to the US Machinery industry average (2.2x).


Next Steps

Future Growth

How is Flowserve forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

17.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FLS's forecast earnings growth (17.5% per year) is above the savings rate (1.7%).

Earnings vs Market: FLS's earnings (17.5% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: FLS's earnings are forecast to grow, but not significantly.

Revenue vs Market: FLS's revenue (3.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: FLS's revenue (3.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FLS's Return on Equity is forecast to be low in 3 years time (15%).


Next Steps

Past Performance

How has Flowserve performed over the past 5 years?

-29.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FLS has high quality earnings.

Growing Profit Margin: FLS's current net profit margins (6.4%) are higher than last year (3.1%).


Past Earnings Growth Analysis

Earnings Trend: FLS's earnings have declined by -29.3% per year over the past 5 years.

Accelerating Growth: FLS's earnings growth over the past year (112%) exceeds its 5-year average (-29.3% per year).

Earnings vs Industry: FLS earnings growth over the past year (112%) exceeded the Machinery industry 1.5%.


Return on Equity

High ROE: FLS's Return on Equity (14.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Flowserve's financial position?


Financial Position Analysis

Short Term Liabilities: FLS's short term assets ($2.5B) exceed its short term liabilities ($1.1B).

Long Term Liabilities: FLS's short term assets ($2.5B) exceed its long term liabilities ($2.0B).


Debt to Equity History and Analysis

Debt Level: FLS's debt to equity ratio (75.8%) is considered high.

Reducing Debt: FLS's debt to equity ratio has increased from 59.8% to 75.8% over the past 5 years.

Debt Coverage: FLS's debt is well covered by operating cash flow (22.7%).

Interest Coverage: FLS's interest payments on its debt are well covered by EBIT (8.5x coverage).


Balance Sheet

Inventory Level: FLS has a high level of physical assets or inventory.

Debt Coverage by Assets: FLS's debt is covered by short term assets (assets are 1.8x debt).


Next Steps

Dividend

What is Flowserve's current dividend yield, its reliability and sustainability?

1.65%

Current Dividend Yield


Dividend Yield vs Market

company1.7%marketbottom25%1.4%markettop25%3.7%industryaverage2.0%forecastin3Years1.8%

Current dividend yield vs market & industry

Notable Dividend: FLS's dividend (1.65%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: FLS's dividend (1.65%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: FLS's dividends per share have been stable in the past 10 years.

Growing Dividend: FLS's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (39.2%), FLS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FLS's dividends in 3 years are forecast to be well covered by earnings (25.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.3yrs

Average management tenure


CEO

Robert Rowe (48yo)

2.8yrs

Tenure

US$8,702,469

Compensation

Mr. Robert Scott Rowe has been Chief Executive Officer and President of Flowserve Corporation since April 1, 2017. Mr. Rowe served as the President of Cameron International Corporation since October 1, 201 ...


CEO Compensation Analysis

Compensation vs Market: Robert's total compensation ($USD8.70M) is above average for companies of similar size in the US market ($USD6.27M).

Compensation vs Earnings: Robert's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Robert Rowe
President2.8yrsUS$8.70m0.048% $2.9m
Keith Gillespie
Senior VP & Chief Sales Officer3.3yrsUS$2.10m0.032% $1.9m
Elizabeth Burger
Senior VP & Chief Human Resources Officer1.8yrsUS$1.67m0.0020% $119.2k
David Wilson
President of Pumps Division1.6yrsUS$2.08m0.0016% $96.3k
John Roueche
Interim CFO0.2yrsUS$930.59k0.013% $753.6k
Tauseef Salma
Vice President of Marketing & Technology1yrsno datano data
Scott Sullivan
Chief Ethics & Compliance Officer & VP4.8yrsno datano data
Lanesha Minnix
Senior VP1.7yrsno data0.00094% $56.6k
Lars Rosene
Vice President of Corporate & Marketing Communications6.3yrsno datano data
Kirk Wilson
President of Flow Control Division4.4yrsno data0.028% $1.7m

2.3yrs

Average Tenure

50.5yo

Average Age

Experienced Management: FLS's management team is considered experienced (2.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Robert Rowe
President2.8yrsUS$8.70m0.048% $2.9m
Rick Mills
Independent Director12.8yrsUS$239.99kno data
John Garrison
Independent Director1.3yrsUS$25.00kno data
Roger Fix
Non-Executive Chairman2.8yrsUS$349.99k0.011% $675.3k
Gayla Delly
Independent Director12.1yrsUS$262.99k0.0020% $118.0k
John Friedery
Independent Director12.5yrsUS$234.99k0.0061% $369.6k
Joseph Harlan
Independent Director12.5yrsUS$224.99kno data
David Roberts
Independent Director8.3yrsUS$239.99kno data
Ruby Chandy
Independent Director2.8yrsUS$239.99k0.0020% $118.6k
Michael McMurray
Independent Director1.3yrsUS$25.00kno data

5.5yrs

Average Tenure

58.5yo

Average Age

Experienced Board: FLS's board of directors are considered experienced (5.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: FLS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Flowserve Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Flowserve Corporation
  • Ticker: FLS
  • Exchange: NYSE
  • Founded: 1912
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Market Cap: US$6.019b
  • Shares outstanding: 130.90m
  • Website: https://www.flowserve.com

Number of Employees


Location

  • Flowserve Corporation
  • 5215 North O'Connor Boulevard
  • Suite 2300
  • Irving
  • Texas
  • 75039
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FLSNYSE (New York Stock Exchange)YesCommon SharesUSUSDJan 1980
FWVDB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1980
0IQELSE (London Stock Exchange)YesCommon SharesGBUSDJan 1980
FLS *BMV (Bolsa Mexicana de Valores)YesCommon SharesMXMXNJan 1980
F1LS34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 1 REPR 1 COMBRBRLJan 2020

Biography

Flowserve Corporation designs, develops, manufactures, distributes, and services industrial flow management equipment in the United States, Europe, the Middle East, Africa, Asia, and internationally. The company operates through three segments: Engineered Product Division (EPD), Industrial Product Division (IPD), and Flow Control Division (FCD). The EPD segment offers custom and other engineered pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines. The IPD segment provides engineered and pre-configured industrial pumps and pump systems; and aftermarket services, including product installation and commissioning services, seal systems spare parts, repairs, re-rate and upgrade solutions, and advanced diagnostics and maintenance solutions. The FCD segment offers industrial valve and automation solutions, including isolation and control valves, actuation, controls, and related equipment. This segment’s products are used to control, direct, and manage the flow of liquids and gases. It primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was incorporated in 1912 and is headquartered in Irving, Texas. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 00:01
End of Day Share Price2020/02/18 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.